CONSULTING AGREEMENT
This
Consulting Agreement (“Agreement”) is made as of February 21, 2008 by and
between XXXX XXXXXX, an individual whose address is c/o Department
of Geological Sciences, MH 000 Xxxxxxxxxx Xxxxx Xxxxxxxxxx, Xxxxxxxxx,
Xxxxxxxxx, XX 00000
(the
“Consultant”), and SIONIX CORPORATION, a Nevada corporation whose address is
0000
Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx XX 00000
(the
“Company”), in reference to the following:
RECITALS
A. The
Company is in the business of developing water purification
technology.
B. The
Consultant is an engineering geology professional who has been providing
advisory board and consulting services to the Company since October 1, 2004
(the
“Service Commencement Date”).
C. The
Company wishes to retain the Consultant, and the Consultant wishes to be
retained by the Company, to assist the Company in its efforts to develop and
market its water purification technology.
NOW,
THEREFORE,
for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Consultant agree as follows:
AGREEMENT
1. Term.
The
Company retains the Consultant and the Consultant accepts this appointment
with
the Company for a period of 12 months, beginning as of January 1, 2008 and
ending on January 1, 2009 unless sooner terminated pursuant to section 5 (the
“Term”).
2. Duties
of Consultant. The
Consultant agrees to perform the consulting services set forth on Exhibit “A” to
this Agreement and made a part of it (the “Services”). The Consultant will
report to the Company’s Chief Executive Officer but will determine the method,
details and means of performing the Services. The Consultant may, at the
Consultant’s own expense, use employees or other subcontractors to assist the
Consultant with the performance of the Services.
3. Compensation.
(a) The
Company shall pay to the Consultant, as compensation for the
Services:
(i) upon
the
Company raising at least $250,000 in gross proceeds from an equity financing
or
series of equity financings occurring on or after December 31, 2007 and before
the end of the Term, for Services performed from January 1 until June 1, 2008,
$10,000 per month payable on the first day of each month during such period;
and
(ii) upon
the
Company raising at least $500,000 in gross proceeds (including the $250,000
referred to in section 3(a)) from an equity financing or series of equity
financings occurring on or after December 31, 2007 and before the end of the
Term: (i) a one time payment of $30,000 for services performed from October
1,
2007 through December 31, 2007, and (ii) for services performed from July 1
until December 31, 2008, $10,000 per month payable on the first day of each
month during such period; and
(iii) upon
the
date of this Agreement, a fully vested 5-year option to purchase 2,880,000
shares of the Company’s common stock at a price of $0.25 per share, pursuant to
a Notice of Grant of Stock Option in the form attached hereto as Exhibit “B” and
a Stock Option Agreement in the form attached thereto as Exhibit A.
(b) In
consideration of the Consultant’s efforts in bringing about a definitive
licensing, manufacturing, distribution, purchase order or substantially similar
agreement between the Company and Primon or any of its affiliates (the “Primon
Agreement”) during the Term or within six months thereafter, the Consultant will
receive, regardless of the termination of this Agreement, 2.5% of the royalty
payments or other amounts received by the Company from Primon pursuant to the
Primon Agreement (collectively, the “Consultant Commissions”), until the
Consultant has received $2,500,000 pursuant to this provision, after which
the
Company shall have no further obligation to pay Consultant Commissions. The
Company will be obligated to pay the Consultant Commissions within 30 days
of
each date on which it receives royalty payments or other amounts from Primon
pursuant to the Primon Agreement.
Notwithstanding
the foregoing, the Consultant understands and agrees that in no event will
the
Company be obligated to pay any person or persons more than an aggregate of
10%
of the royalty payments or other amounts received by the Company from Primon
pursuant to the Primon Agreement (the “10% Threshold”). In the event any third
party other than Xxxxxxx Xxxxx demonstrates a valid claim for royalties or
similar payments from the Company resulting from the Primon Agreement which
causes the Company’s total obligation to pay commissions in connection therewith
to exceed the 10% Threshold, then the Consultant Commissions shall be ratably
reduced in an amount equal to 33.33% of the amount exceeding the 10% Threshold.
Regardless of any reduction in the Consultant Commissions pursuant to this
paragraph, the Consultant may continue to earn the Consultant Commissions at
the
reduced rate until he has earned the maximum $2,500,000 as provided in the
preceding paragraph.
(c) The
Company agrees to carry forward the debt incurred to the Consultant in the
amount of $144,000 for services rendered during the time the Consultant served
as a member of the Board of Advisors, which will be payable at the earlier
of
September 30, 2010 or the date on which the Company shows on its balance sheet
as filed with the SEC at least $1.5 million in working capital and the closing
price of its common stock has been at least $1.25 for at least 15 consecutive
trading days. For the purpose hereof, “working capital” shall mean the
difference between the Company’s total current assets and total current
liabilities. The obligation set forth in this Section 3(c) shall survive the
termination of this Agreement.
4. Nondisclosure.
4.1 Property
Belonging to Company.
The
Consultant agrees that all developments, ideas, devices, improvements,
discoveries, apparatus, practices, processes, methods, concepts and products
(collectively the “Inventions”) developed by the Consultant from and after the
Service Commencement Date until the end of the Term are the exclusive property
of the Company and shall belong to the Company. The Consultant agrees to assign
the Inventions to the Company, provided,
however,
notwithstanding the foregoing, the Consultant shall not be required to assign
his rights in any invention which the Consultant developed entirely on his
own
time without using the Company’s equipment, supplies, facilities or trade secret
information except for those inventions that either:
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(i) Relate
at
the time of conception or reduction to practice of the invention to the
Company’s business, or actual or demonstrably anticipated research or
development of the Company; or
(ii) Result
from any work performed by the Consultant for the Company.
The
Consultant understands that he bears the full burden of proving to the Company
that an invention qualifies fully under this section 4.1.
4.2 Access
to Confidential Information. The
Consultant agrees that from the Service Commencement Date until the end of
the
Term, , the Consultant has had and will have access to and become acquainted
with confidential proprietary information (“Confidential Information”) which is
owned by the Company and is regularly used in the operation of the Company’s
business. The
Consultant agrees that the term “Confidential Information” as used in this
Agreement is to be broadly interpreted and includes (i) information that has,
or
could have, commercial value for the business in which the Company is engaged,
or in which the Company may engage at a later time, and (ii) information that,
if disclosed without authorization, could be detrimental to the economic
interests of the Company.
The
Consultant agrees that the term “Confidential
Information” includes, without limitation, any patent, patent application,
copyright, trademark, trade name, service xxxx, service name, “know-how,”
negative “know-how,” trade secrets, customer and supplier identities,
characteristics and terms of agreement, details of customer or consultant
contracts, pricing policies, operational methods, marketing plans or strategies,
product development techniques or plans, business acquisitions plans, science
or
technical information, ideas, discoveries, designs, computer programs (including
source codes), financial forecasts, unpublished financial information, budgets,
processes, procedures, formulae, improvements or other proprietary or
intellectual property of the Company, whether or not in written or tangible
form, and whether or not registered, and including all memoranda, notes,
summaries, plans, reports, records, documents and other evidence
thereof.
The
Consultant acknowledges that all Confidential Information, whether prepared
by
the Consultant or otherwise acquired by the Consultant in any other way, shall
remain the exclusive property of the Company.
4.3 No
Unfair Use by Consultant.
The
Consultant promises and agrees that the Consultant (which shall include his
employees and contractors) shall not misuse, misappropriate, or disclose in
any
way to any person or entity any of the Company’s Confidential Information,
either directly or indirectly, nor will the Consultant use the Confidential
Information in any way or at any time except as required in the course of the
Consultant’s business relationship with the Company. The Consultant agrees that
the sale or unauthorized use or disclosure of any of the Company’s Confidential
Information constitutes unfair competition. The Consultant promises and agrees
not to engage in any unfair competition with the Company and will take measures
that are appropriate to prevent his employees or contractors from engaging
in
unfair competition with the Company.
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4.4 Further
Acts.
The
Consultant agrees that, at any time during the Term, upon the request of the
Company and without further compensation, but at no expense to the Consultant,
the Consultant shall perform any lawful acts, including the execution of papers
and oaths and the giving of testimony, that in the opinion of the Company,
its
successors or assigns, may be necessary or desirable in order to obtain,
sustain, reissue and renew, and in order to enforce, perfect, record and
maintain, patent applications and United States and foreign patents on the
Company’s inventions, and copyright registrations on the Company’s
inventions.
4.5 Obligations
Survive Agreement.
The
Consultant’s obligations under this section 4 shall survive the expiration or
termination of this Agreement for a period of five (5) years.
5. Termination.
5.1 Termination
on Default. Should
either party default in the performance of this Agreement or materially breach
any of its provisions, the non-breaching party may terminate this Agreement
by
giving written notification to the breaching party. Termination shall be
effective immediately on receipt of said notice. For purposes of this section,
material breaches of this Agreement shall include, but not be limited to, (i)
the failure by the Company to pay the compensation set forth in section 3 above;
(ii) the willful breach or habitual neglect by the Consultant of the duties
which he is required to perform under the terms of this Agreement; (iii) the
Consultant’s commission of acts of dishonesty, fraud, or misrepresentation; (iv)
the failure by the Consultant to conform to all laws and regulations governing
the Consultant’s duties under this Agreement; or (v) the commission by the
Consultant of any act that tends to bring the Company into public scandal or
which will reflect unfavorably on the reputation of the Company.
5.2 Termination
on Notice. Either
party may terminate this Agreement at any time by giving thirty (30) days
written notice to the other party.
5.3 Automatic
Termination. This
Agreement terminates automatically on the occurrence of any of the following
events: (i) a filing for bankruptcy by the Company; or (ii) the death or
Disability of the Consultant. As
used
herein, the term “Disability” means the good faith determination of the board of
directors of the Company that the Consultant has become so physically or
mentally incapacitated or disabled as to be unable to satisfactorily perform
his
duties hereunder for a period of 60 consecutive calendar days or any 90 days
during the Term, such determination based upon a certificate as to such physical
or mental disability issued by a licensed physician and/or psychiatrist (as
the
case may be) mutually agreed upon by the Consultant and the
Company.
5.4 Return
of Company Property.
Upon the
termination or expiration of this Agreement, the Consultant shall immediately
transfer to the Company all files (including, but not limited to, electronic
files), records, documents, drawings, specifications, equipment and similar
items in its possession relating to the business of the Company or its
Confidential Information (including the work product of the Consultant created
pursuant to this Agreement).
6. Status
of Consultant.
(a) Independent
Contractor Status.
Consultant is an independent contractor and not an employee of the Company
for
any purpose whatsoever, including state and federal taxes and workers'
compensation insurance, but is an independent contractor. Neither this
Agreement, the relationship created between the parties hereto pursuant to
this
Agreement, nor any course of dealing between the parties hereto is intended
to
create, or shall create, an employment relationship, a joint venture,
partnership or any similar relationship. Consultant does not have, nor shall
Consultant hold out Consultant as having, any right, power, or authority to
create any contract or obligation, either express or implied, on behalf of,
in
the name of, or binding upon the Company, or to pledge the Company's credit,
or
to extend credits in the name of the Company, unless otherwise specifically
authorized by the Company’s board of directors.
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(b) Nature
of Consultant's Relationship to Company.
Consultant is engaged in Consultant's own business independent of the Company,
and the nature of Consultant's independent contractor relationship with the
Company shall be further defined as follows:
(i) State
and Federal Taxes.
Company
will not withhold any monies for any state, local or federal taxing authorities
from compensation earned by Consultant pursuant to this Agreement. Company
shall
prepare and file a Form 1099 with the Internal Revenue Service ("IRS") reporting
the compensation paid to Consultant.
(ii) Fringe
Benefits.
Consultant shall receive no fringe benefits under this Agreement whatsoever,
and
accordingly, shall receive no insurance benefits, disability income, vacation,
holiday pay, sick pay or any other benefits.
(iii) Workers'
Compensation.
Company
shall not provide workers' compensation coverage for Consultant or Consultant's
agents. Any and all workers' compensation coverage shall be the sole
responsibility of Consultant.
(iv) Hours.
Consultant shall not be required to work any specified hours or specified
days.
(v) Licensing/Insurance.
Consultant shall obtain and maintain at Consultant's sole expense any licenses
or insurance required by federal, state or local law.
(vi) Location.
During
the Term, the Consultant may perform his duties from the Company's offices
in
Irvine, California, or any other location, at the discretion of the Consultant.
7. Representations
by Consultant.
The
Consultant represents that the Consultant has the qualifications and ability
to
perform the services in a professional manner, without the advice, control,
or
supervision of the Company. The Consultant shall indemnify, defend, and hold
harmless the Company, and the Company’s officers, directors, and shareholders
from and against any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries, and deficiencies, including,
without limitation, interest, penalties, and reasonable attorney fees and costs,
that the Company may incur or suffer and that arise, result from, or are related
to any breach or failure of the Consultant to perform any of the
representations, warranties and agreements contained in this
Agreement.
8. Business
Expenses. The
Company shall reimburse the Consultant for all reasonable business expenses
incurred during the Term (the “Expenses”), with any individual Expense or
aggregate Expenses in any 30-day period in excess of $1,000 to be submitted
to
the Company’s Chief Executive Officer for pre-approval.
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9. Notices.
Unless
otherwise specifically provided in this Agreement, all notices or other
communications (collectively and severally called “Notices”) required or
permitted to be given under this Agreement, shall be in writing, and shall
be
given by: (A) personal delivery (which form of Notice shall be deemed to have
been given upon delivery), (B) by private airborne/overnight delivery service
(which forms of Notice shall be deemed to have been given upon confirmed
delivery by the delivery agency), or (C) by electronic or facsimile or
telephonic transmission, provided the receiving party has a compatible device
or
confirms receipt thereof (which forms of Notice shall be deemed delivered upon
confirmed transmission or confirmation of receipt). Notices shall be addressed
to the address set forth in the introductory section of this Agreement, or
to
such other address as the receiving party shall have specified most recently
by
like Notice, with a copy to the other party.
10. Choice
of Law and Venue.
This
Agreement shall be governed according to the laws of the State of California.
Venue for any legal or equitable action between the Company and the Consultant
which relates to this Agreement shall be in the state and federal courts located
in the City of Los Angeles, CA.
11. Entire
Agreement.
This
Agreement and the attachments and exhibits hereto supersede any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the services to be rendered by the Consultant to the Company and contain
all
of the covenants and agreements between the parties with respect to the services
to be rendered by the Consultant to the Company in any manner whatsoever. Each
party to this agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any party,
or
anyone acting on behalf of any party, that not embodied herein, and that no
other agreement, statement, or promise not contained in this Agreement shall
be
valid or binding on either party.
12. Counterparts.
This
Agreement may be executed manually or by facsimile signature in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute but one and the same instrument.
13. Severability.
If any
term or provision of this Agreement or the application thereof to any person
or
circumstance shall, to any extent, be determined to be invalid, illegal or
unenforceable under present or future laws effective during the term of this
Agreement, then and, in that event: (A) the performance of the offending term
or
provision (but only to the extent its application is invalid, illegal or
unenforceable) shall be excused as if it had never been incorporated into this
Agreement, and, in lieu of such excused provision, there shall be added a
provision as similar in terms and amount to such excused provision as may be
possible and be legal, valid and enforceable, and (B) the remaining part of
this
Agreement (including the application of the offending term or provision to
persons or circumstances other than those as to which it is held invalid,
illegal or unenforceable) shall not be affected thereby and shall continue
in
full force and effect to the fullest extent provided by law.
14. Preparation
of Agreement.
It
is
acknowledged by each party that such party either had separate and independent
advice of counsel or the opportunity to avail itself or himself of same. In
light of these facts it is acknowledged that no party shall be construed to
be
solely responsible for the drafting hereof, and therefore any ambiguity shall
not be construed against any party as the alleged draftsman of this
Agreement.
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15. No
Assignment of Rights or Delegation of Duties by Consultant;Company’s Right to
Assign.
The
Consultant’s rights and benefits under this Agreement are personal to it and
therefore no such right or benefit shall be subject to voluntary or involuntary
alienation, assignment or transfer. The Company may assign its rights
and delegate its obligations under this Agreement to any other person or
entity.
16. Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the same
instrument, binding on all parties hereto. Any signature page of this Agreement
may be detached from any counterpart of this Agreement and reattached to any
other counterpart of this Agreement identical in form hereto by having attached
to it one or more additional signature pages.
17. Electronically
Transmitted Documents.
If a
copy or counterpart of this Agreement is originally executed and such copy
or
counterpart is thereafter transmitted electronically by facsimile or email
transmission of a “pdf.” file, such facsimile or “pdf.” document shall for all
purposes be treated as if manually signed by the party whose facsimile signature
appears.
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WHEREFORE,
the
parties have executed this Agreement on the date first written
above.
| “CONSULTANT” | ||
| /s/ Xxxx Xxxxxx | ||
| Xxxx Xxxxxx | ||
| “COMPANY” | ||
| Sionix Corporation | ||
| By: | /s/ Xxxxxxx Xxxxxxxx | |
| Name: |
Xxxxxxx
Xxxxxxxx
|
|
| Title: | ||
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EXHIBIT
“A”
DUTIES
OF CONSULTANT
Consultant
will (i) actively assist in the testing and demonstration of the Company’s water
purification product on site at the Villa Park Dam in California; (ii) attend
technical meetings, demonstrations and trade shows in support of the Company’s
business; (iii) prepare grant applications and white papers as technological
and
scientific results are confirmed; (iv) act in the best interests of the Company
and aid in its day-to-day operations for a minimum of 5 days per month, after
which the Company will pay Consultant an hourly rate of $250 per hour.
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